Oheka Castle is pictured in an undated file photo.

Oheka Castle is pictured in an undated file photo. Credit: Newsday / Daniel Goodrich

Oheka Castle owner Gary Melius and the board of the Cold Spring Country Club are in talks to turn over the estate and golf course to golf great Jack Nicklaus and developer Stanley Gale in a 99-year lease, according to a letter sent to members of the country club and confirmed by several people involved.

The proposed deal would include $20 million in improvements to the golf course and would transform Oheka Castle into its clubhouse. If the deal closes, it could bail out Melius’ cash-strapped ownership of the historic castle and mark the end of an era in which the estate served as a site of political pilgrimage for some of the most powerful people on Long Island.

Nicklaus — interviewed Tuesday at Augusta National Golf Club, where he’s attending the Masters — confirmed his group is “not buying it” but is involved in the Oheka golf project. He said his company will treat the existing Cold Spring golf course “like a raw piece of property.”

The real estate deal is being handled by Daniel Gale Sotheby’s International Realty. Citing “confidentiality agreements,” Patricia Petersen, president and chief executive of the real estate firm, which is based in Cold Spring Harbor, declined to comment.

In a letter to its roughly 150 equity members, Cold Spring Country Club President Marvin Adler wrote that the club’s board unanimously approved the terms of the deal outlined in a March 25, 2015, letter of intent from the Nicklaus-Gale Group. Adler’s letter also notes that while a contract still needs to be drafted, the board had agreed on some key details of the land deal.

The equity members, who own shares in the club and have voting rights, stand to receive payments totaling $150,000 each if the new club opens, according to the letter.

Howard Stein, an attorney representing the club, confirmed that an agreement was in the works. “It’s an exciting deal, and it is being negotiated,” Stein said. “I can’t really discuss specifics at this time.”

Under the deal outlined in the letter, Nicklaus’ golf course company, Nicklaus Design, would completely redesign the course. Nicklaus, 76, who is golf’s all-time leader with 18 major championship victories, has toured the course, according to the letter. His company has more than 390 courses open around the world, including Sebonack Golf Club in Southampton.

The letter does not spell out many key details of the proposed project, including when the deal could be closed. Huntington Town spokesman A.J. Carter declined to answer questions, such as whether the town board will need to approve a final plan.

Oheka Castle, where Melius lives and which he operates as a hotel and wedding destination, would be a clubhouse where locker rooms, dining facilities and a pro shop would be located. The country club’s existing clubhouse will be referred to as “Oheka Lodge,” the letter says.

Melius, 71, would not disclose details of the agreement, including whether he would continue to live at the castle. “I’m not ready to discuss that at this point,” Melius said.

Melius purchased Oheka Castle for $1.45 million more than 30 years ago, and the estate has since been appraised for as much as $43.8 million, according to Trepp LLC, a Manhattan-based company that tracks commercial mortgages. He has used the estate to cement his status as a Long Island power broker, hosting political fundraisers, parties and poker games attended by powerful friends, such as former U.S. Sen. Alfonse D’Amato.

That influence resulted in a 2013 scandal that ended the career of then-Nassau police Commissioner Thomas Dale after Melius asked Dale to arrest the campaign worker of a political rival.

In February 2014, Melius was shot and wounded by a masked gunman in the castle parking lot. The case has not been solved.

Melius has struggled to keep Oheka afloat in recent years. He defaulted on the property’s $27.9-million mortgage in 2013, Trepp reported. He negotiated a modification of the loan the next year and received a five-year reprieve, according to Trepp.

In July 2015, Melius’ mortgage company, LNR Property LLC of Miami Beach, noted that Oheka required “substantive repairs” and needed a monthly budget of $72,455 “to keep the property in good order and in good condition,” according to a monthly report Trepp filed.

In December, Melius stopped making required payments into a cash management account, Trepp reported. As a result, LNR declared the entire mortgage balance due in January, and Melius is currently sixty days late on that debt, according to Trepp.

The Huntington Town Board approved a March 2012 zoning change that would allow 190 condominiums to be built at Oheka. Under the new deal, according to the letter to the country club members, the condo project will still be built but will be associated with “the Nicklaus brand.”

The condominiums would likely fetch from $1 million to $5 million each, said David Pennetta, a Melville-based executive director with Cushman & Wakefield who said he is not involved in the discussions. Pennetta said he believed major Long Island developers had discussed potential deals with Melius over the past couple of years, although he said he did not know exactly which companies had talked with Melius.

The property is within walking distance of the Cold Spring Harbor Long Island Rail Road station, it offers easy access to Republic Airport in East Farmingdale and it is situated roughly halfway between Manhattan and the Hamptons, making it attractive to affluent buyers, Pennetta said. “This has just got such success written all over it,” he said.

Nicklaus’ associate, Scott Tolley, cautioned that the deal is not complete. “A lot has to happen,” Tolley said.

With Mark Herrmann and Jeff Williams

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